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Air travel choices in multi-airport markets

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  • Ishii, Jun
  • Jun, Sunyoung
  • Van Dender, Kurt

Abstract

We study how air travel consumers departing from a multi-airport region trade-off across airport and airline supply characteristics. We empirically investigate this trade-off by estimating a weighted conditional logit model of airport-airline choice, using survey data on travels departing from one of three San Francisco Bay Area airports and arriving at one of four airports in greater Los Angeles in October 1995. Non-price characteristics like airport access time, airport delay, flight frequency, the availability of particular airport-airline combinations, and early arrival times are found to strongly affect choice probabilities. We calculate marginal effects and counterfactual scenarios to compare the values of these characteristics among each other and across traveler type. In order to examine the robustness of the conditional logit model, we estimate a mixed logit model, and find that the results are similar. We attribute the similarity to our strictly defined travel market and to our distinction between leisure and business travelers, thus controlling for two important sources of consumer heterogeneity. We consider the implications of our empirical findings on vertical integration between airlines and airports, on the effectiveness of "airport dominance," and on the competitive effect of entry by low cost carriers.

Suggested Citation

  • Ishii, Jun & Jun, Sunyoung & Van Dender, Kurt, 2009. "Air travel choices in multi-airport markets," Journal of Urban Economics, Elsevier, vol. 65(2), pages 216-227, March.
    • Handle: RePEc:eee:juecon:v:65:y:2009:i:2:p:216-227
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    More about this item

    Keywords

    Airports Airlines Air travel demand Discrete choice;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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